Crypto Valuations Could Double as Protocols Link Revenue to Token Buybacks

Crypto valuations could double as protocols increasingly use revenue to fund token buybacks and burns, according to Bitwise Chief Investment Officer Matt Hougan. Hougan pointed out that investors have not yet priced in this shift, leaving some crypto assets undervalued.

The change is driven by the growing number of decentralized finance (DeFi) applications and layer-1 networks adopting revenue-capture mechanisms. For example, Hyperliquid uses 99% of its revenue to buy back and burn HYPE tokens, while Uniswap has linked protocol fees to UNI burns.

Aave DAO's buyback program purchased over 205,000 AAVE tokens in its first 10 months, with the founder stating that '100% of Aave Protocol and GHO revenue goes to the $AAVE token.'

Hougan attributed this shift to a more permissive regulatory environment in the US, which has allowed projects to expand without violating securities laws.